Iin the papers this week 9 – 15 January 2010

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Grocery code of conduct and ombudsman to be introduced; Tesco (UK) enjoys strongest Christmas in three years; Bord Bia forecasts exports growth for 2010



14 January 2010

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The Government is to introduce a statutory code of conduct for grocery retailers and suppliers, reports The Irish Times. Minister for Enterprise and Employment Mary Coughlan will announce later this month that a code is being introduced, alongside an ombudsman to enforce its rulings. The code will operate on a voluntary basis initially but will be put on a statutory footing when the National Consumer Agency and the Competition Authority are merged into a single body. It is expected the grocery trade will have to fund the legislation which applies only to retailers above a certain size.

The decision to implement a code has been commended by the Irish Farmers Association’s new president, John Bryan. Earlier this week, he hit out against the multiples’ corporate greed, which he claims has decimated farming incomes. According to Bryan, a small consumer price rise and a reduction in retailers’ profit margins would mean a realistic price for farmers. He therefore plans to set up a retailer, processor and consumer relations product team within the IFA and will meet with the various parties involved as soon as possible to resolve the problem.

Ireland’s food and drinks exports industry is on course for a "return to growth" according to Bord Bia. The trade development agency revealed a 12% fall in 2009’s food and drink exports this week, which came in at EUR*7.1bn. However The Irish Independent reports that Bord Bia has said growth forecast in the dairy and beef sectors, which together account for 60% of  exports, will be enough to bring the overall industry into positive territory. However the smaller sectors of ‘prepared food’ and beverages are "still in the line of fire" for 2010.

UK food group Premier Foods said it expects profit to rise 3.5% in 2009. The Irish Times reports the company which forecast trading profits in the region of £320 million, said branded sales growth was "encouraging" for the year, with growth expected to reach 6.4%. The company also reported an improvement in the Irish grocery sector during the second half of the year, and praised its ability to adapt during the recession, “with a substantial increase in sourcing directly from the UK coupled with a move to more centralised distribution."

Tesco has reported its strongest holiday season in the UK for three years. Sales at the supermarket giant increased 7. 5% in the six weeks to 9 January 2010. Research firm Taylor Nelson Sofres claims a shift by shoppers towards more expensive foods boosted sales of its Finest range. Its bid to lure more festive shoppers in, by doubling points on its Clubcard loyalty card and mailing additional vouchers also paid off. The Irish Times highlights however that European sales, which includes Ireland, failed to perform as well, growing only by 0.8%.

Retailers suffered a 38% drop in sales during the recent prolonged spell of freezing weather, according to Retail Ireland. Business World reports that a survey conducted by the IBEC-affiliated group shows 84% of retailers reported their customers experienced major difficulties in getting to the shops. This translated into an average 38% decline in sales since 1 January, with non-food sales being affected even more.

Ireland’s latest consumer confidence index has stabilised to levels which are better than any time since the first three months of 2008. The Evening Herald reports the index remained comfortably above the 50.2 level recorded in December 2008. This represents the third month in a row in which consumer sentiment has held steady.  According to KBC economist Austin Hughes, Irish consumers aren’t “unrealistically optimistic,” but there are signs pessimism about the year ahead is easing.

Despite robust Christmas sales figures from the likes of Tesco, British retailers have predicted a “very tough” 12 months lies ahead. The Irish Examiner reports Stephen Robertson, director general of the British Retail Consortium, has predicted no growth in consumer spending over 2010 and indicated the recent glut of positive updates from the festive season may represent a false dawn. Tax rises and evidence households were choosing to save more, were the reasons attributed to his caution highlighted evidence that households were choosing to save more.

Analysts were also  wary of the impact of an extra £100m (€111.2m) of loyalty vouchers given to customers before Christmas, a factor which could have added a percentage point to Tesco’s sales figure.

Only one-in-three examinerships were successful last year with figures showing close to five businesses failed each day over the last three months. The Irish Examiner reports 1,570 Irish companies went into liquidation, receivership or examinership last year, up 108% on 2008, according to figures from financial advisory firm FGS. Within retail, 144 failures were recorded, of which 52 were in the clothing retail area.

The ISEQ index showed drinks group CC had enjoyed the highest percentage climb by Thursday, finishing up 4.3% at €2.90. This followed comments by chief executive John Dunsmore in the British press that “ingredients are now in place” for it to deliver on market expectations over the next three years. The Irish Times also reports Kerry rose almost 2.4% and Glanbia closed up 1.1%, following the publication of a report on the US dairy sector which indicated the recovery in global dairy product prices will continue in 2010. However Fyffes ended the day flat, despite issuing a relatively upbeat trading statement.



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